Date: 20020115
Docket: T-842-99
Neutral Citation: 2002 FCT 44
BETWEEN:
FIDDLER ENTERPRISES LTD.,
DRAGON FISHING LTD.,
FIDDLER BUILDING LTD.,
DAVID NORMAN FIDDLER,
JAMES DONALD FIDDLER and
MARK STEPHEN
Plaintiffs
- and -
ALLIED SHIPBUILDERS LTD.
Defendant
REASONS FOR ORDER
HARGRAVE P.
[1] Rule 225 provides for an order for disclosure, in an affidavit of documents, of all relevant documents in the possession, power or control of a party. The present motion is one for the disclosure of a Statement of Particular Average, arising out of fire damage, which occurred to the fishing vessel "Knight Dragon" on 27 September 1997 and owner's work, which was apparently done at the same time as insured fire damage was repaired.
[2] The Statement of Particular Average must be disclosed, for it is relevant. However this order does not determine whether there might be some reason why the Statement of Particular Average ought not, in due course, to be produced for inspection. Such an order, which would be a product of Rule 230, if necessary, is a future matter.
ANALYSIS
[3] The Defendant wishes to obtain disclosure of the Particular Average Statement prepared for underwriters in order to divide owner's work from fire damage work. It also appears that the Defendant wishes the Particular Average Statement in order to see whether time for repairs was extended by reason of owner's work, which could mean a deduction from the loss of use claim.
[4] Average is a term used in marine insurance. In the context of general average it deals with a sacrifice carried out during a voyage to preserve the undertaking from real peril and leads to a proportional reimbursement by all of the other parties to that marine voyage or, as often referred to, the parties to the marine adventure. In the context of particular average, as here, it denotes a partial loss, in this case being fire damage to the fishing vessel "Knight Dragon".
[5] In the case of a particular average claim, here damage to a vessel, the underwriter appoints an adjuster to compile and allocate all of the relative expenses, that person being known as an average adjuster. Thus the compilation of the particular average which, in the normal course of events, shows those items which are proximately caused by an insured peril and those items which are for the account of the owner, usually being work commissioned by the owner and which is done concurrently with the insured repairs: such is usually an efficient approach, as opposed to having a vessel in a shipyard for specific damage related repairs and then putting the vessel into the shipyard, to do owner's work, at some other time.
[6] The ususal particular average statement also allocates time spent on insured work and on owner's work. It may, in some instances, indicate that the vessel would have been out of the shipyard at an earlier date had it not been for owner's work and that is one of the two concerns of the Defendant the other being, as I have indicated, a division of owner's work and of fire damage work. The Plaintiffs say the latter is for the account of the Defendant shipyard.
[7] Any consideration of relevance of documents invariably begins with Compagnie Financiere du Pacifique v. Peruvian Guano Co. (1882) 11 Q.B.D. 55 (C.A.). In that instance Lord Justice Brett began with the proposition that a party swearing an affidavit of documents ". . . is bound to set out all documents in his possession or under his control relating to any matter in question in the action." (page 62). He then goes on to ask what actually are the documents relating to any matter in question in the action. He rejects a narrow approach, denying that the requirement be satisfied by merely setting out documents as would support or defeat an issue in the cause:
. . . the practice with regard to insurance cases shews, that the Court never thought that a person making the affidavit would satisfy the duty imposed on him by merely setting out such documents, as would the evidence to support or defeat any issue in the cause. (loc cit)
[8] We now get to the nub of the Peruvian Guano decision:
The doctrine seems to me to go farther than that and to go as far as the principle which I am about to lay down. It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may--not which must--either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words "either directly or indirectly," because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences: . . . (pages 62 and 63)
This concept of advancing one's own case, or damaging that of an adversary, is analogous to our Rule 222(2) defining a document as relevant if either a party intends to rely upon it or it ". . . tends to adversely affect the party's case or to support another party's case.". Before leaving the Peruvian Guano case I would note that Lord Justice Brett, in the last sentence of his reasons, states that the decision does not deal with the effect of the documents either following disclosure or when they are offered in evidence at trial:
I repeat that our present judgment does not convey any opinion as to the effect of the documents when they have been disclosed, and when they are offered in evidence at the trial (page 66)
That is the case here for there may be some reason why the Particular Average Statement need not be produced for inspection or as to its acceptance or weight at the trial.
[9] Prima facie the Particular Average Statement is both relevant pursuant to the Peruvian Guano case and within Rule 222(2) and subject to an order for disclosure pursuant to Rule 225.
[10] For various reasons, which I will consider shortly, the Plaintiffs say that the Particular Average Statement is irrelevant and not producible at trial. However, this overlooks the concept that disclosure of documents is a matter of relevance, not discretion. While an average adjuster's report has no legal force, per se, such statements are rarely questioned by the courts: indeed, courts generally look upon average statements as prima facie evidence of the details, of the computations contained and of the allocation of average. This is because the profession of average adjusting is both old and honourable, with established rules of practice which are of great assistance in ascertaining how claims ought to be determined.
[11] Further, an average adjuster's report is neutral, for unlike a lawyer, an average adjuster is not, or ought not, to be an advocate. To achieve this an average adjuster must and invariably does, like an arbitrator, strive to be impartial. This has certainly been the case for at least the last 130 years, going back to when the Association of Average Adjusters was founded in England in 1873 and beyond. Indeed, the concept of the impartial and essential average adjuster goes back much farther, the need for practical, fair minded and common sense solutions to marine commercial losses having been with us for at least 3,000 years: see Buglass on Marine Insurance and General Average, 1991 edition, Cornell Maritime Press, at pages 130-131.
[12] The Defendant has, as I say, established a prima facie case for the disclosure of the Particular Average Statement as a relevant document. Indeed, the document, in its usual form, will in all likelihood assist both the parties and the Court in determining the extent of the fire damage repairs, as opposed to owner's work and the loss of use of the "Knight Dragon" as a result of the fire.
[13] As I understand the Plaintiff's opposition it contains various elements, which I will now touch upon.
[14] First, while Mr. Gesner, the average adjuster, sets out in his affidavit in opposition to disclosure, that a statement of particular average is an adjustment of an insurance claim based upon the conditions of the policy, without reference to what might be recoverable in a subrogated action and that the adjustment is subject to final approval by underwriters, the affidavit does not deny the likelihood that there is an allocation in the average adjustment between underwriter's work and owner's work. By ignoring this aspect in his affidavit Mr. Gesner damages the Plaintiffs' position as to relevance and disclosure. That the Particular Average Statement refers, as Mr. Gesner avers, to terms of the policy and what is recoverable from underwriters, items which are irrelevant in the present action, does not detract from the likelihood of the document's relevance in delineating owner's work and the length of time that might be taken for owner's work, as contrasted with fire damage repair work the length of time to repair the fire damage. Production is not measured in terms of great relevance or marginal relevance: even a marginally relevant document must be produced. Indeed, Master Funduck, in Clif-Den Holdings Ltd. v. Automated Concrete Ltd. (1986) 73 A.R. 236, an Alberta case referred to by the Plaintiffs, makes the observation that "it is not uncommon for documents to be put in evidence which contain some things which are irrelevant".
[15] Second, Mr. Gesner makes the point that the Defendant would be fully aware of the nature of the repairs, actual time taken to conduct the repairs and how long it would normally take to conduct the repairs. It is also submitted that the Defendant would be taken to have most, although not all, of the invoices for the repair work. Yet that is not an excuse for denying production. Here I would refer to Canada Southern Petroleum Ltd. v. Amoco Canada Petroleum Co. [1995] 5 W.W.R. 720 (Alberta Queen's Bench) at 723, that case standing for the proposition that even if the other side already has a given document, from another source, it still must be produced. It is not within the spirit or the intent of the Rules to overlook the basic premise that disclosure of documents is a matter of relevance, not discretion. Here I would also refer to Havana House Cigar and Tobacco Merchants Ltd. v. Naeini (1998) 80 C.P.R. (3d) 132 (F.C.) at 141-142 and Cooper Industries Inc. v. Caplan Industries Inc. (1998) 80 C.P.R. (3d) 237 (F.C.) at 240 for the application of the principle from Canada Southern Petroleum.
[16] Third, while the Particular Average Statement may contain opinions as to what is covered under the insurance policy, an irrelevant point in this litigation, that does not protect the document from production as a relevant document if it contains any residual relevance. Here I have in mind, as I have already said, the allocation of work between owner's work and fire damage repairs and the length of time required for those repairs, all being relevant information. Those are the sort of things that one would expect to see in an Particular Average Statement and indeed, Mr. Gesner does not deny that such material is contained in his adjustment report.
[17] The Plaintiffs, refer to several cases standing, by extension and in the view of the Plaintiffs, for the proposition that the Statement of Particular Average, being prepared for an adjustment between owner and underwriter, a different purpose than that of the present litigation, is irrelevant and not producible as it reaches conclusions which may not necessarily be based on the same conditions and conclusions that will be used by the trial judge. This gets back to the concept that while the average adjuster's report has no legal force in itself, it is but rarely questioned in a court of law. I believe this is because it is a neutral allocation of loss by an expert in the profession of adjusting. Certainly the allocation may, to a substantial degree, be that of coverage under the terms of a policy. However, the adjustment is also an allocation between underwriter's work and pure owner's work of the sort that is not attributable to the loss. Further, none of the three cases referred to by the Plaintiffs, Clif-Den Holdings Ltd. (supra), Sorenson v. Standard General Construction Ltd., an unreported 29 October, 1998 decision in Alberta Queen's Bench action 9403-10541 and Verlysdonk v. Premier Petrenas Construction Co. Ltd. (1987) 39 D.L.R. (4th) 715 (Ont H.C.), refer to an average adjustment. They are specific to their own facts in that they deal with other matters and documents, including an appraisal under a home protection insurance policy, discovery questions dealing with the terms of an insurance policy and production of a residential insurance policy. None of this is on point, particularly in that insurance polices and average statements are very different documents. The former would be completely irrelevant in these proceedings, while the latter, to refer back to the text in Peruvian Guana, and in the context of the present proceedings, "may . . . either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary.".
CONCLUSION
[18] In the present instance the particular average report would in all likelihood be relevant and indeed, Mr. Gesner's affidavit skirts around that issue, to the extent that it damages the Plaintiffs' position. The document is prima facie relevant. There is no cogent reason why the report ought not to be disclosed. It therefore will be disclosed in a supplemental affidavit of documents.
(Sgd.) "John A. Hargrave"
Vancouver, British Columbia
15 January 2002
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-842-99
STYLE OF CAUSE: FIDDLER ENTERPRISES LTD. ET AL. v.
ALLIED SHIPBUILDERS LTD.
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: January 14, 2002
REASONS FOR ORDER: HARGRAVE P.
DATED: January 15, 2002
APPEARANCES:
Mr. Jason Kostyniuk FOR PLAINTIFFS
Mr. John Bromley
Mr. Simon Barker FOR DEFENDANT
SOLICITORS OF RECORD:
Bromley Chapelski FOR PLAINTIFFS
Vancouver, British Columbia
Oland & Co. FOR DEFENDANT
Vancouver, British Columbia